SURVEY OF RECENT JURISPRUDENCE

IN CIVIL LAW
(Part 1)

January 2004 December 2004

By:
Anna Francesca M. Limbo
Head, Academics Committee
UP BarOps 2005

I.

Agency and Partnership

A. Assumed Agent

Culaba Vs. CA (April 2004): The basis of agency is representation. A person dealing
with an agent is put upon inquiry and must discover upon his peril the authority of the
agent. In the instant case, the petitioners loss could have been avoided if they had
simply exercised due diligence in ascertaining the identity of the person to whom they
allegedly made the payments. The fact that they were parting with valuable
consideration should have made them more circumspect in handling their business
transactions. Persons dealing with an assumed agent are bound at their peril to
ascertain not only the fact of agency but also the nature and extent of authority, and in
case either is controverted, the burden of proof is upon them to establish it

B. Implied Ratification

II.

Manila Memorial Park Vs. Linsangan (November 2004): However, in the absence of
circumstances putting a reasonably prudent man on inquiry, ratification cannot be
implied as against the principal who is ignorant of the facts. However, in the absence
of circumstances putting a reasonably prudent man on inquiry, ratification cannot be
implied as against the principal who is ignorant of the facts.

Credit Transactions
A. Mortgage

Ocampo Vs. Ocampo (April 2004): The Civil Code provides that an essential requisite
of a contract of mortgage is that the mortgagor be the absolute owner of the thing
mortgaged. Co-ownership cannot be presumed even if only a portion of the property
was mortgaged to mortgagor, because a co-owner may dispose only of ones interest in
the ideal or abstract part of the undivided thing co-owned with others. The effect of a
mortgage by a co-owner shall be limited to the portion that may be allotted to that
person upon the termination of the co-ownership. In this case, the mortgagor

mortgaged a definite portion of the property and thus negated any acknowledgement
of co-ownership.
B. Interest Rates

III.

Imperial Vs Jaucian (April 2004): Iniquitous and unconscionable stipulations on

interest rates, penalties and attorneys fees are contrary to morals. Consequently,
courts are granted authority to reduce them equitably. If reasonably exercised, such
authority shall not be disturbed by appellate courts.

Land Titles and Deeds

A. Deed Restrictions

Southern Pachem Development Vs CA (December 2004): The deed restrictions, duly

annotated on the titles, were incorporated in the contract of sale. The deed
restrictions provided, among others, that a buyer or his successor-in interest
automatically becomes a member of the private respondent as an association and
enjoined compliance with its rules and regulations for the security, maintenance,
beautification, and general welfare of the land owners. Assessments collected by the
private respondent would constitute a lien on the subject property. The deed
restrictions is a valid agreement freely and voluntarily agreed upon between the
petitioner and private respondent. When an agreement between the parties has been
forged, such contract becomes the law between the parties and each one is bound to
comply therewith.

B. Indefeasibility of Torrens Title

Sacdalan Vs. CA (May 2004): The principle of indefeasibility of a Torrens Title does
not apply where fraud attended the issuance of the title, as is conclusively established
in this case. The Torrens Title does not furnish a shield for fraud.

Vera Cruz Vs. Calderon (July 2004): An innocent purchaser for value is one who buys
the property of another, without notice that some other person has a right or interest
in such property and pays the full price for the same, at the time of such purchase or
before he has notice of the claims or interest of some other person in the property. A
person dealing with registered land may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige him to go behind
the certificate to determine the condition of the property.

C. Sales Patents

Heirs of Gamo vs Heirs of Frando (December 2004): Disposal of public agricultural

land through a sales patent, as in the instant case, is governed by Commonwealth Act
No. 141, the Public Land Act. Under this law, a sales patent may be granted to a
Filipino citizen who may or may not be of lawful age, provided that one who is below
the age of majority is the head of a family. The law provides that after winning the bid
and paying the purchase price, the applicant must comply with the necessary
requirements -- specifically the cultivation, occupation and introduction of
improvements over at least one fifth of the land applied for. After the applicant meets
the legal requirements, the director of lands then orders the survey of the land and the

issuance of the sales patent in the applicants favor. Section 107 of Commonwealth
Act 141 further requires the registration of the patent under the Land Registration Act
by furnishing the registrar of deeds a certified copy thereof, after which the
corresponding certificate of title would accordingly be issued to the patentee.

D. Reconveyance

Heirs of Saludares Vs. Dator (January 2004): Notwithstanding the indefeasibility of

the Torrens title, the registered owner may still be compelled to reconvey the
registered property to its true owner. The rationale for the rule is that reconveyance
does not set aside or re-subject to review the findings of fact of the Bureau of Lands.
In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property or its title
which has been wrongfully or erroneously registered in another persons name, to its
rightful or legal owner, or to the one with a better right

E. Registration and the Torrens System

Shoppers Paradise Vs. Roque (January 2004): It is enough, between the parties to a
donation of an immovable property, that the donation be made in a public document
but, in order to bind third persons, the donation must be registered in the registry of
Property (Registry of Land Titles and Deeds). According to PD 1529, The act of
registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be
made in the office of the Register of Deeds for the province or city where the land
lies.

Co Vs. Militar (January 2004): In Tenio-Obsequio v. Court of Appeals,

it was held
that the Torrens System was adopted in this country because it was believed to be the
most effective measure to guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized.It is settled
that a Torrens Certificate of title is indefeasible and binding upon the whole world
unless and until it has been nullified by a court of competent jurisdiction. Under
existing statutory and decisional law, the power to pass upon the validity of such
certificate of title at the first instance properly belongs to the Regional Trial Courts in
a direct proceeding for cancellation of title.

Heirs of Roxas Vs. Garcia (August 2004): At all events, the remedy of one who has
established his ownership over a property but which property has been wrongfully or
erroneously registered through fraud or mistake in anothers name is, after the lapse of
one year from the date of issuance of the questioned decree, not to set aside the
decree, it having become incontrovertible and no longer open to review, but to
institute an ordinary action in the ordinary court of justice for reconveyance. If the
property, however, has already passed into the hands of an innocent purchaser for
value, the remedy is to file an action for damages from the person who allegedly
registered the property through fraud,2[40] or if he had become insolvent or if the
action is barred by prescription, to file an action for recovery against the Assurance

1[14]

Fund under Section 95 of P.D. No. 15293[41] (the Property Registration Decree) within
a period of six years from the time the right to bring such action accrues.
F. Reversion

IV.

Morandarte Vs. CA (August 2004): A complaint for reversion involves a serious

controversy, involving a question of fraud and misrepresentation committed against the
government and it seeks the return of the disputed portion of the public domain. It
seeks to cancel the original certificate of registration, and nullify the original
certificate of title, including the transfer certificate of title of the successors-ininterest because the same were all procured through fraud and misrepresentation. The
State, as the party alleging that fraud and misrepresentation attended the application
for free patent, bears the burden of proof.
Obligations and Contracts

A. Compromise Agreements

Quiros Vs. Arjona (March 2004): The Civil Code contains salutary provisions that
encourage and favor compromises and do not even require judicial approval. Thus,
under Article 2029 of the Civil Code, the courts must endeavor to persuade the litigants
in a civil case to agree upon some fair compromise. Pursuant to Article 2037 of the Civil
Code, a compromise has upon the parties the effect and authority of res judicata, and
this is true even if the compromise is not judicially approved. Articles 2039 and 2031
thereof also provide for the suspension of pending actions and mitigation of damages to
the losing party who has shown a sincere desire for a compromise, in keeping with the
Codes policy of encouraging amicable settlements

Hocoma Foundation Vs Santos (November 2004): The general rule is that a

compromise has upon the parties the effect and authority of res judicata, with respect
to the matter definitely stated therein, or which by implication from its terms should
be deemed to have been included therein. This holds true even if the agreement has
not been judicially approved.

B. Form of Contract

Clemeno Vs. Lobregat (September 2004): The contract of sale of the parties is
enforceable notwithstanding the fact that it was an oral agreement and not reduced in
writing as required by Article 1403(2) of the New Civil Code. This is so because the
provision applies only to executory, and not to completed, executed or partially
executed contracts. In this case, the contract of sale had been partially executed by
the parties, with the transfer of the possession of the property to the respondent and
the partial payments made by the latter of the purchase price thereof.

C. Legal Compensation

Associated Bank Vs. Tan (December 2004): The bank generally has a right of setoff
over the deposits therein for the payment of any withdrawals on the part of a
depositor. The right of a collecting bank to debit a clients account for the value of a
dishonored check that has previously been credited has fairly been established by

jurisprudence. To begin with, Article 1980 of the Civil Code provides that [f]ixed,
savings, and current deposits of money in banks and similar institutions shall be
governed by the provisions concerning simple loan. Hence, the relationship between
banks and depositors has been held to be that of creditor and debtor. Thus, legal
compensation under Article 1278 of the Civil Code may take place when all the
requisites mentioned in Article 1279 are present
D. Statute of Frauds

Averia Vs. AVeria (August 2004): In any event, the Statute of Frauds applies only to
executory contracts and not to contracts which are either partially or totally
performed

E. Rescission

Barredo Vs. Leano (June 2004): Art. 1385 of the Civil Code provides that [r]escission
creates the obligation to return the things which were the object of the contract,
together with their fruits, and the price with its interest.4[21] The vendor is therefore
obliged to return the purchase price paid to him by the buyer if the latter rescinds the
sale.5[22] Thus, where a contract is rescinded, it is the duty of the court to require both
parties to surrender that which they have respectively received and place each other
as far as practicable in his original situation.

F. Void Contracts

NHA Vs. Grace Baptist Church (March 2004): In the case at bar, the offer of the NHA
to sell the subject property, as embodied in Resolution No. 2126, was similarly not
accepted by the respondent. Thus, the alleged contract involved in this case should be
more accurately denominated as inexistent. There being no concurrence of the offer
and acceptance, it did not pass the stage of generation to the point of perfection. As
such, it is without force and effect from the very beginning or from its incipiency, as if
it had never been entered into, and hence, cannot be validated either by lapse of time
or ratification. Equity can not give validity to a void contract, and this rule should
apply with equal force to inexistent contracts.

G. Trusts

Cuenco Vs. Manguerra (October 2004): A trust is a legal relationship between one
having an equitable ownership in a property and another having legal title to it. Trust
relations between parties may either be express or implied. Express trusts are created
by the direct and positive acts of the parties, indicated through some writing, deed,
will, or words evidencing an intention to create a trust. On the other hand, implied
trusts are those that, without being express, are deducible from the nature of the
transaction as matters of intent[;] or which are superinduced on the transaction by
operation of law as a matter of equity, independently of the particular intention of the
parties. Implied trusts may either be resulting or constructive trusts, both coming into
being by operation of law. Resulting trusts are presumed to have been contemplated by
the parties and are based on the equitable doctrine that valuable consideration, not
legal title, determines the equitable title or interest. These trusts arise from the

nature of or the circumstances involved in a transaction, whereby legal title becomes

vested in one person, who is obligated in equity to hold that title for the benefit of
another.

V.

Persons and Family Relations

A. Illegitimate Children

Eceta Vs. Eceta (May 2004): The filiation of illegitimate children, like legitimate
children, is established by (1) the record of birth appearing in the civil register or a
final judgment; or (2) an admission of legitimate filiation in a public document or a
private handwritten instrument and signed by the parent concerned. In the absence
thereof, filiation shall be proved by (1) the open and continuous possession of the status
of a legitimate child; or (2) any other means allowed by the Rules of Court and special
laws. The due recognition of an illegitimate child in a record of birth, a will, a
statement before a court of record, or in any authentic writing is, in itself, a
consummated act of acknowledgement of the child, and no further court action is
required. In fact, any authentic writing is treated not just a ground for compulsory
recognition; it is in itself a voluntary recognition that does not require a separate action
for judicial approval.

Briones Vs. Miguel (October 2004): An illegitimate child is under the sole parental
authority of the mother. In the exercise of that authority, she is entitled to keep the
child in her company. The Court will not deprive her of custody, absent any imperative
cause showing her unfitness to exercise such authority and care.

B. Property Relations of Spouses

Ching Vs. CA (February 2004): For the conjugal partnership to be liable for a liability
that should appertain to the husband alone, there must be a showing that some
advantages accrued to the spouses. Certainly, to make a conjugal partnership
responsible for a liability that should appertain alone to one of the spouses is to
frustrate the objective of the New Civil Code to show the utmost concern for the
solidarity and well being of the family as a unit. The husband, therefore, is denied the
power to assume unnecessary and unwarranted risks to the financial stability of the
conjugal partnership

Villanueva Vs. CA (April 2004): Thus, under the Family Code, if the properties are
acquired during the marriage, the presumption is that they are conjugal. The burden of
proof is on the party claiming that they are not conjugal. This is counter-balanced by
the requirement that the properties must first be proven to have been acquired during
the marriage before they are presumed conjugal

C. Support

Lam Vs. Chua (March 2004): It is incumbent upon the trial court to base its award of
support on the evidence presented before it. The evidence must prove the capacity or
resources of both parents who are jointly obliged to support their children as provided
for under Article 195 of the Family Code; and the monthly expenses incurred for the
sustenance, dwelling, clothing, medical attendance, education and transportation of
the child.

VI.

Property
A. Co-Ownership

Heirs of Balite Vs Lim (December 2004): A deed of sale that allegedly states a price
lower than the true consideration is nonetheless binding between the parties and their
successors in interest. Furthermore, a deed of sale in which the parties clearly
intended to transfer ownership of the property cannot be presumed to be an equitable
mortgage under Article 1602 of the Civil Code. Finally, an agreement that purports to
sell in metes and bounds a specific portion of an unpartitioned co-owned property is
not void; it shall effectively transfer the sellers ideal share in the co-ownership.

B. Lease

Chua Vs. Victorio (May 2004) : Upon non-payment of rent by the lessee, the lessor
may elect to treat the contract as rescinded and thereby determine the right of the
lessee to continue in possession; and this right to recover possession may be enforced in
an action of unlawful detainer. The import of provisions on lease is to grant the lessor
the option of extrajudicially terminating the contract of lease by simply serving a
written notice upon the lessee.

Tamio Vs. Ticson (November 2004): In general, a lessee is not allowed to challenge
the title of the lessor. Indeed, it is immaterial whether the lessor had any title at all
to the property at the time the lease was commenced. However, due to the peculiar
circumstances in the present case, the Court makes an exception to this rule.
Otherwise, it would sanction unjust enrichment in favor of the respondent and cause
unjust poverty to the petitioner

DO Plaza Mgt vs. Heirs of Atega (December 2004): We have defined fair rental value
as the reasonable compensation for the use and occupation of the leased
property.[There is no hard and fast rule in determining the reasonableness of the rental
charged. In Manila Bay Club Corporation vs. CA, [we considered: (a) the prevailing
rates in the vicinity; (b) location of the property; (c) use of the property; (d) inflation
rate; and (e) the testimony of one of the private respondents. In Umali vs. The City of
Naga, we added a catch-all phrase that "other minor factors" should be taken into
consideration.

C. Possession and Ownership

Dela Cruz Vs. Dela Cruz (January 2004): Tax receipts and declaration of ownership
for taxation purposes are strong evidence of ownership. It has been ruled that
although tax declarations or realty tax payments are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of owner
for no one in his right mind will be paying taxes for a property that is not in his actual
or constructive possession

Calicdan Vs. Cendana (February 2004): Prescription is another mode of acquiring

ownership and other real rights over immovable property. It is concerned with lapse of
time in the manner and under conditions laid down by law, namely, that the possession
should be in the concept of an owner, public, peaceful, uninterrupted and adverse.

Lagrimas Vs. CA (April 2004): Thus, in forcible entry and unlawful detainer cases, if
the defendant raises the question of ownership in his pleadings and the question of

possession cannot be resolved without deciding the issue of ownership, the inferior
courts have the undoubted competence provisionally to resolve the issue of ownership
for the sole purpose of determining the issue of possession. The MeTC, therefore, did
not err in taking cognizance of the instant case.

Custodio Vs. Corrado (July 2004): The distinction between a summary action of
ejectment and a plenary action for recovery of possession and/or ownership of the land
is well-settled in our jurisprudence. What really distinguishes an action for unlawful
detainer from a possessory action (accion publiciana) and from a reinvindicatory action
(accion reinvindicatoria) is that the first is limited to the question of possession de
facto. An unlawful detainer suit (accion interdictal) together with forcible entry are
the two forms of an ejectment suit that may be filed to recover possession of real
property. Aside from the summary action of ejectment, accion publiciana or the
plenary action to recover the right of possession and accion reinvindicatoria or the
action to recover ownership which includes recovery of possession, make up the three
kinds of actions to judicially recover possession

C. Public Domain

VII.

Villarico Vs. Sarmiento (November 2004): Property of public dominion is outside the
commerce of man and hence it: (1) cannot be alienated or leased or otherwise be the
subject matter of contracts; (2) cannot be acquired by prescription against the State;
(3) is not subject to attachment and execution; and (4) cannot be burdened by any
voluntary easement

Sales
A. Brokers

Lim Vs Saban (December 2004): In Macondray & Co. v. Sellner, the Court recognized
the right of a broker to his commission for finding a suitable buyer for the sellers
property even though the seller himself consummated the sale with the buyer. The
Court held that it would be in the height of injustice to permit the principal to
terminate the contract of agency to the prejudice of the broker when he had already
reaped the benefits of the brokers efforts.

B. Double Sales

Occena Vs. Esponilla (June 2004): Article 1544 of the New Civil Code provides that in
case an immovable property is sold to different vendees, the ownership shall belong:
(1) to the person acquiring it who in good faith first recorded it in the Registry of
Property; (2) should there be no inscription, the ownership shall pertain to the person
who in good faith was first in possession; and, (3) in the absence thereof, to the
person who presents the oldest title, provided there is good faith. In all cases, good
faith is essential. It is the basic premise of the preferential rights granted to the one
claiming ownership over an immovable. What is material is whether the second buyer
first registers the second sale in good faith, i.e., without knowledge of any defect in
the title of the property sold. The defense of indefeasibility of a Torrens title does not
extend to a transferee who takes the certificate of title in bad faith, with notice of a
flaw

C. Option To Purchase
Dijamco Vs. CA (October 2004): The contract of option to purchase was separate from
the contract to sell and both contracts needed separate and distinct considerations for
validity.

D. Notice of Lis Pendens

Heirs of De Leon Vs. CA (February 2004): Indeed, one who buys property with full
knowledge of the flaws and defects of the title of his vendor and of a pending
litigation over the property gambles on the result of the litigation and is bound by the
outcome of his indifference. A purchaser cannot close his eyes to facts which should
put a reasonable man on guard and then claim that he acted in good faith believing
that there was no defect in the title of the vendor

E. Redemption

Samson Vs. Judge Rivera (May 2004): The purchaser, who has a right to possession
that extends after the expiration of the redemption period, becomes the absolute
owner of the property when no redemption is made. Hence, at any time following the
consolidation of ownership and the issuance of a new transfer certificate of title in the
name of the purchaser, he or she is even more entitled to possession of the
property.6[46] In such a case, the bond required under Section 7 of Act 3135 is no longer
necessary, since possession becomes an absolute right of the purchaser as the
confirmed owner

F. Warranty

Supercars Mgt. Vs Flores (December 2004): It is well within respondents right to

recover damages from petitioner who committed a breach of warranty against hidden
defects. Article 1599 of the Civil Code partly provides:
Article 1599. Where there is a breach of warranty by the seller, the buyer may,
at his election:
xxx
(4) Rescind the contract of sale and refuse to receive the goods, or if the
goods have already been received, return them or offer to return them to
the seller and recover the price or any part thereof which has been paid.
When the buyer has claimed and been granted a remedy in anyone of these ways, no
other remedy can thereafter be granted, without prejudice to the provisions of the
second paragraph of Article 1191. Petitioners contention that under Article 1191 of
the Civil Code, rescission can no longer be availed of as the vehicle was already in the
hands of an innocent purchaser for value lacks merit. Rescission is proper if one of the
parties to a contract commits a substantial breach of its provisions. It creates an
obligation to return the object of the contract. It can be carried out only when the
one who demands rescission can return whatever he may be obliged to restore.

Rescission abrogates the contract from its inception and requires a mutual restitution
of the benefits received.

VIII.

Succession
A. Heirs
Rioferio vs. CA (January 2004): Pending the filing of administration proceedings, the
heirs without doubt have legal personality to bring suit in behalf of the estate of the
decedent in accordance with the provision of Article 777 of the New Civil Code that
(t)he rights to succession are transmitted from the moment of the death of the
decedent. The provision in turn is the foundation of the principle that the property,
rights and obligations to the extent and value of the inheritance of a person are
7
transmitted through his death to another or others by his will or by operation of law.
Even if administration proceedings have already been commenced, the heirs may still
bring the suit if an administrator has not yet been appointed.

IX.

Torts and Damages

A. Loss of Earning Capacity

Magbanua Vs. Tabusares (June 2004): Article 2205 of the New Civil Code allows the
recovery of damages for loss or impairment of earning capacity in cases of temporary
or permanent personal injury. Such damages covers the loss sustained by the
dependents or heirs of the deceased, consisting of the support they would have
received from him had he not died because of the negligent act of another. The loss is
not equivalent to the entire earnings of the deceased, but only that portion that he
would have used to support his dependents or heirs. Hence, we deduct from his gross
earnings the necessary expenses supposed to be used by the deceased for his own
needs. Apply the Villa Rey formula:
Thus, the formula for the computation of unearned income is:
Net
Earning
Capacity

life
expectancy

gross
annual
income

less

living
expenses

Life expectancy is determined in accordance with the formula:

2/3

[80 age of deceased]

Gabriel Vs CA (October 2004): Villa Rey Transit applies to all cases of wrongful death
for the purpose of ascertaining the appropriate amount of actual damages due the
heirs, based on life expectancy and the rate at which losses sustained should be fixed.
It is settled that the absence of documentary evidence to support a claim for damages
for loss of earning capacity of the deceased does not preclude recovery of said
damages

B. Moral Damages

Equitable Banking Vs. Calderon (December 2004): An award of moral damages

would require, firstly, evidence of besmirched reputation, or physical, mental or
psychological suffering sustained by the claimant; secondly, a culpable act or
omission factually established; thirdly, proof that the wrongful act or omission of
the defendant is the proximate cause of the damages sustained by the claimant;
and fourthly, that the case is predicated on any of the instances expressed or
envisioned by Articles 2219 and 2220 of the Civil Code.

C. Vehicular Accidents

Anonuevo Vs. CA (October 2004): In case of collision involving a bicycle and a motor
vehicle, there will be no contributory negligence on the part of the bicycle rider for
failure to place safety devices on his ride, even if such is a violation of a municipal
ordinance, if the driver of the motor vehicle fails to prove a causal connection between
said violation and the injury caused. (compare with Art. 2185 of NCC).